1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL No. …………… OF 2022

(Arising out of SLP (Criminal) No. 9528 of 2021)

Sri Narendra Kumar A. Baldota … Appellant (s)

Versus

The State of Karnataka … Respondent (s)

J U D G M E N T

Indira Banerjee, J.

Leave granted.

2.This Appeal is against an order dated 22

nd

October 2021 passed by the

Dharwad Bench of the High Court of Karnataka dismissing the Criminal Petition

being CRL.P. No.100167 of 2017 filed by the Appellant under Section 482 of the

Code of Criminal Procedure (“Cr.P.C.”), seeking to quash the proceedings against

the Appellant in Crime No.69/2012 on the file of the III Additional District and

Sessions Judge, Ballari later numbered as Special Case No.04/2016 for offences

punishable under Sections 13(1)(c) and 13(1)(d) read with Section 13(2) of the

Prevention of Corruption Act, 1988 (hereinafter referred to as “the P.C. Act”) and

Sections 120B and 420 of the Indian Penal Code (“IPC”).

3.The Appellant is the Chairman and Managing Director of M/s MSPL

Limited. In 2010, MSPL Limited imported an Aston Martin Rapide car for which

the Company paid the applicable customs duty. The Company also paid road

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tax to the Regional Transport Office (RTO), Hosapete.

4.One Jagadish B.N., Advocate filed a private complaint in the Court of XXIII

Additional City Civil Sessions Judge, Bangalore City and Special Judge,

Prevention of Corruption Act, Bangalore Urban District, Bangalore City alleging

that there was collusion and conspiracy between RTOs in Karnataka as a result

of which appropriate road tax was not being collected. It was alleged that cars

were being imported in Karnataka for which RTO was not charging road tax as

per the actual cost.

5.By an order dated 7

th

August 2012, the Court of XXIII Additional City Civil

& Special Judge, Prevention of Corruption Act Bengaluru passed an order

referring the complaint to the Superintendent of Police, Lokayuktha, Bengaluru

Urban, under Section 156(3) of the Cr.P.C. with a direction to constitute a team

of four Deputy Superintendents of Police to investigate the matter and report.

On 14

th

August 2012, FIR in respect of the complaint was registered at the

Lokayuktha Police Station, Bengaluru, Urban and a criminal case being Crime

No.69/2012 was started.

6.Some relevant observations and/or findings in the order dated 7

th

August

2012 of the XXIII Additional City Civil Sessions Judge, Bangalore City and Special

Judge, Prevention of Corruption Act, Bangalore Urban District, Bangalore City are

as follows:

“This complaint is filed under section 200 of Cr.P.C. on 06.08.2012

by the complainant Mr. Jagadeesh B.N, advocate and the

complainant claims that a huge scam has taken place in

connection with imported cars, more particularly Bentley and

Ferari cars.

3

…

5.The complaint claims that huge scam has taken place regarding

registration of Foreign cars that are imported to India more

particularly Bentley and Ferari. The complainant claims that the

vehicle dealers, middle man, smugglers across the country and

owners of the imported vehicle at Mangalore have misquoted and

collected the price of Bentley and Ferari car have come away with

the registration, and in the process have also managed suppress

the brand names of the cars. The complainant claims that he is

unable to procure that facts which have been hidden and buried at

high public functionaries and it is only an authorised investigating

agency that can unearth the fraud taken place regarding the fraud

in the registration.

6. The complainant claims that after a tax investing exposed the

alleged smuggling operation, nervous members of the super-rich

have scrambled to avoid arrest by abandoning cars, including

Bentleys and Astoria Martins on the streets of New Delhi and it is

reported and a copy photograph is made available. The

complainant claims that the said document is down loaded from

the internet.

7.The Complainant claims that more than 500 cars entered India

and majority have been illegal or illegal means and to general car

registered it requires the payment of tax of 18% of the amount.

The complainant claims that to get a car registered in the passport

authorities, and approved procedure is laid down by the Motor

Vehicles Act, more particularly a custom duty of 10% should have

been paid.

8.Complaint further claims that not less than 500 cars entered in

Karnataka and for name sake 4 to 5 car were mentioned as

Bentley and remaining cars have been registered by suppressing

the brand name and more than 98% have been registered on the

basis of invoice and not on the basis of cash bill.

…

11.The complainant further claims that the manufacturing

rate of Bentley car is 1.16 crores for basic model and car which

have entered Bangalore range from basic model to top end. The

selling rate at the factory ord is 86,000 pounds i.e.,

Rs.1,16,00,000/- and on road the value of Bentley car

would go beyond Rs.3 crores for a car and if formalities are

properly complied with. The complainant further claims

that top end model would range up more the Rs.6 crores.

12. The complainant also claims that the racket is done with

extraordinary brilliance and intelligence and it is abetting come

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and also influencing the public servant in getting their car

registered and unless proper investigation agency conducted fair,

equal and comprehensive investigation, the fraud cannot be

unearthed……

13. The complainant further claims that the majority of the dealers

who have not disclosed their identity in Bangalore after receiving

the assignment, have based on the documents only invoice which

totally not explained and have cleverly avoided the cash receipt

being given, for the reason that the majority of the authorized

dealer are not entitled to deal with the vehicle.

…..

20. The complainant claims that the accused persons are private

individual and no sanction is necessary to take cognizance against

them the complainant orally submits that the accused persons

have abetted and influenced the public servants for committing

the offences and the investigating agency would get the definite

picture orally after ascertaining with the concerned transport

authority at different levels and at different parts of Karnataka, but

mainly in Bangalore as the cars moved from Bangalore and

fabrication and forgery of documents took place in Bangalore,

besides abetments (sic) to commit offence under prevention of

corruption act complainant further claims that a full scale

investigation is required by independent agency.

…..

24. The complainant further orally submitted that, few vehicles

were registered with take documents in the transport authority in

India and thereafter in Karnataka through Bangalore more

particularly rural areas and thereafter they go away from the state

and will be applied in different parts it is further submitted that for

registration the documents are necessary and one the registration

is the certificate given by the R.T.O. in that event the different

between the fake and genuine papers pertaining to the presence

of the motors vehicles get vanished.

…

28.The Complainant claims that the accused persons who are

the dealers, distributors in Bangalore, other places have forged the

documents and have successfully abated the public servants

(Transport Authorities) and have got the registration of the said

vehicles illegally and have resulted in the loss of crores and cores

of rupees and in the process have cheated the Government Public

at large. He further submits that mafia in the form of a ‘net work’

is behind the scam.

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...

31.In the cell all context and circumstances of the case and

after recording the complainant his grievance and contents of the

complaint at this stage I am of the sincere view that is it just and

proper that only a comprehensive investigation is necessary by the

superintendent of police, lokayukta Bangalore urban by constitute

a team of four Dy. SP and entrust the matter to them to

investigation and to report. Hence I proceed to pass the following

ORDER

The complaint is referred to superintendent of Police, Lokayukta,

Bangalore Urban under Section 156(3) of Cr.P.C. with a direction to

constitute a team of four Dy. S.P. for investigating the matter and

to report. “

7.The Appellant is neither a vehicle dealer nor a middle man nor a

smuggler. He is not even the owner of the vehicle in question but only the

Chairman/Managing Director of M/s MSPL Limited, the Company which has

imported the vehicle, and got the same registered. Neither the Appellant nor

the Company of which the Appellant is the Managing Director has abandoned

any vehicle.

8.On 27

th

February 2013, the RTO, Hosapete issued a demand notice to M/s

MSPL Limited demanding differential motor vehicle tax of Rs.20,44,468/- in

respect of the vehicle in question. M/s MSPL Limited immediately complied with

the demand and paid the demanded sum of Rs.20,44,468/- in full on 20

th

March

2013, after which the RTO, Hosapete issued a “No Dues Certificate” to M/s MSPL

Limited.

9.On 2

nd

November 2015, Lokayuktha Police issued a notice dated 13

th

October 2015 to the RTO, Ballari. By a letter dated 2

nd

November 2015, the

RTO informed the Lokayuktha Police that M/s MSPL Limited had paid the entire

deficit tax.

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10. On 8

th

December 2015, Lokayuktha Police filed an inquiry report-cum-

chargesheet in the aforesaid case being Crime No. 69/2012 under Sections

13(1)(c), 13(1)(d) and 13(2) of the P.C. Act, 1988 and Sections 120B and 420 of

IPC.

11.In the chargesheet, it is alleged that the Appellant had conspired with one

Mr. K. Pampapati, Regional Transport Officer, Hosapete and Mr. Shanmukh Naik

Superintendent, Office of Regional Transport Officer, Hosapete to evade

payment of an amount of Rs.20,44,468/- towards road tax.

12. Pursuant to the chargesheet filed by the Lokayuktha Police, against the

Appellant and others, Special Case No.4 of 2016 was started in the Court of the

III Additional District and Sessions Judge, Ballari sitting at Hosapete.

13.By an order dated 4

th

November 2016, in Special Case No.4/2016, the

learned III Additional District and Sessions Judge, Ballari sitting at Hosapete took

cognizance and issued summons to the Appellant.

14.Thereafter, the Appellant filed Criminal Petition No.100167 of 2017 before

the Dharwad Bench of the High Court of Karnataka under Section 482 of the

Cr.P.C., praying that the proceedings in Special Case No.4/2016 on the file of the

III Additional District and Sessions Judge, Ballari sitting at Hosapete be quashed

as against the Appellant.

15.Section 8A of the Karnataka Motor Vehicles Taxation Act, 1957 provides as

follows:-

“8A. Collection of tax escaping payment.- If at any time it is found

that the amount of tax paid for any period in respect of any motor vehicle

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falls short of the tax payable under this Act, then, notwithstanding any

incorrect entry or the absence of any entry in the certificate of registration

relating to the motor vehicle regarding the tax payable in respect of such

vehicle or the issue of a taxation card or an entry having been made in

such taxation card regarding the payment of tax for such period, the

taxation authority may, after notice to the registered owner or person

having possession or control of the motor vehicle and giving him an

opportunity of being heard recover the difference between the tax so paid

and the tax payable by such owner or person”.

16.In the said petition, the Appellant pointed out that short collection in road

tax, if any, could be collected from the owner of the vehicle, under Section 8A of

the Karnataka Motor Vehicles Taxation Act, 1957. On receipt of demand notice,

M/s MSPL Limited, the owner of the vehicle in question, had paid the differential

tax. M/s MSPL Limited had deposited the entire road tax in full.

17.By an interim order dated 14

th

February 2017, the Dharwad Bench of the

High Court of Karnataka was pleased to stay the criminal proceedings against

the Appellant. The interim order was extended from time to time.

18.By the judgment and order dated 22

nd

October 2021 impugned in this

Court, the High Court dismissed the Criminal Revisional Petition being CRL.P.

No.100167 of 2017.

19.It is the case of the Appellant that on 19

th

December 2019, the Bengaluru

Bench of the High Court of Karnataka allowed a Writ Petition/Criminal Revisional

Petition filed by one S.V. Nandaraju and others being Writ Petition

No.41103/2016 (GM-RES) and quashed proceedings initiated against petitioners

in the aforesaid case, S.V. Nandaraju, which arose from the same chargesheet

as in the present case. The High Court held:-

“23. In that view of the matter, as already noticed, the occurrence of

the events and accrual of cause of action in the present set of

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matters were between the years 2003 and 2006. The private

complaint under Section 200 of Cr.P.C. was registered on

06.08.2012, while the FIR was registered on 14.08.2012. It is an

admitted fact that except petitioners No.6 and 7, in

Crl.P.No.5130/2016, who retired in the year 2013 and 2015

respectively, the other petitioners had already retired, way back in

the year 2006-2007. Some of the petitioners continue to serve.

However, as noticed earlier the State Government had declined to

sanction prosecution against the serving employees. It was also

observed in the Government Order that two of the employees had

already retired and therefore the State Government declined to

sanction prosecution. Furthermore, the State Government,

while pointing out to Section B(a) of the Taxation Act, had

observed that if there was short collection of tax, the

difference could be collected from the owners of the

vehicles. It is an admitted fact that the owners of the

vehicles were called upon to pay the difference amount and

the same has been paid by them. Consequently, the criminal

proceedings against the owners of the vehicles were

quashed by this Court. Further, as held by the State Government,

since Section 21 of the Taxation Act protects the Officers who acted

in good faith, and since sanction to prosecute was declined by the

State Government, the same benefit is required to be granted to the

petitioners who are similarly placed. Some of the petitioners have

already got the benefit of the order passed by the Government.”

20.Mr. Rohatgi, learned Senior Counsel appearing for the Appellant drew

attention of this Court to an order dated 26

th

September 2019 passed by the

Bengaluru Bench of the High Court of Karnatka in Criminal Petition No.3087 of

2018 titled S. Rajendran v. State of Karnataka & Others and an order

dated 11

th

December 2019 passed by another Bench of the High Court of

Karnatka at Bengaluru in Criminal Petition No.344 of 2017 (K.J. Kruruvilla v.

State of Karnataka & Another). In both the cases, the criminal revisional

petitions were allowed and the proceedings against the petitioners were

quashed.

21.In the case of S. Rajendran (supra) he had purchased a Toyota Prado

vehicle, which was registered on 3

rd

November 2007. Pursuant to the private

complaint filed by the Respondent No. 2, FIR was registered and chargesheet

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was filed on 28

th

November 2016. In the meanwhile, on 28

th

July 2010, a notice

was issued demanding a sum of Rs.2,83,480/-. At the time of hearing, the

petitioner in Criminal Petition No.344 of 2017 produced a receipt acknowledging

payment of the aforesaid amount. Taking note of the fact that there was no

material annexed to the chargesheet against the petitioner, S. Rajendran, in

Criminal Petition No.3087 of 2018, and that payment of differential tax had been

made before filing of the private complaint, the petition was allowed.

22.In the case of the K.J. Kuruvilla (supra), the petitioner had purchased a

Range Rover which was registered on 30

th

March 2007. At the time of

Registration, the petitioner was called upon to pay Rs.9,99,628/- towards Life

Time Tax. Later the vehicle was sold on 11

th

March 2011. Thereafter, the

petitioner was called upon to pay differential tax of Rs.19,045/- which was paid.

Relying on S. Rajendran (supra), Criminal proceedings against K.J. Kuruvilla

were also quashed. Under Section 8A of the Karnataka Motor Vehicle Taxation

Act, 1957 a notice is required to be issued to the petitioner to explain how there

was shortfall in collection of tax and thereafter the petitioner is required to pay

the differential amount, if any.

23.The chargesheet filed by the police is totally vague and devoid of material

particulars. The charges in the Chargesheet were identical stereotype charges.

Only the dates of registration and the deficit fee amount varied from case to

case. On such stereotype charge is as follows:-

“On 10.01.2011 at the time of registering the vehicle shown in

Column No.4, indulged with the officers shown in column No.2 and

hatched a criminal conspiracy by paying deficit fee of Rs.20,44,468/-

causing loss of revenue to Government and thus committed offence of

cheat.”

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24.As observed above, the Appellant is Chairman and Managing Director of

the corporate entity, which purchased the vehicle in question. There is not a

whisper in the chargesheet of the specific role played by the Appellant or how

he committed the offence of cheating.

25.Criminal law cannot be set into motion as a matter of course. Summoning

of an accused in a criminal case is a serious matter. To set Criminal law into

motion, the order of the Magistrate summoning the accused, must reflect that

he has applied his mind to the facts of the case. Before the Magistrate issues

summons to a Chairman, Managing Director, Director or any other official of the

company, the Magistrate has to record his satisfaction of a prima facie case

against him/her in his/her own capacity is sine qua non for initiation of criminal

proceedings against a Chairman, Managing Director or officer of a company. It

is well settled that no official of a company can be dragged into criminal

proceedings only in his/her capacity as official of the company, without any

specific role attributed to him/her in relation to the offence alleged against the

company.

26.In Ravindranatha Bajpe v. Mangalore Special Economic Zone

Limited and Others

1

, this Court held:-

"……All of them are arrayed as an accused as Chairman, Managing

Director, Deputy General Manager (Civil & Env.), Planner & Executor,

Chairman and Executive Director respectively. Therefore, as such, in

absence of any specific allegations and the specific role attributed

to them, the learned Magistrate was not justified in issuing process

against accused nos. 1 to 8 for the offences punishable under

Sections 427, 447, 506 and 120B read with Section 34 IPC.

26. As observed by this Court in the case of Pepsi Foods Ltd. v. Special

Judicial Magistrate, (1998) 5 SCC 749 and even thereafter in catena of

decisions, summoning of an accused in a criminal case is a serious matter.

Criminal Law cannot be set into motion as a matter of course. In paragraph

1 2021 SCC Online SC 806

11

28 in Pepsi Foods Limited (supra), it is observed and held as under:

“28. Summoning of an accused in a criminal case is a serious

matter. Criminal law cannot be set into motion as a matter of

course. It is not that the complainant has to bring only two

witnesses to support his allegations in the complaint to have

the criminal law set into motion. The order of the Magistrate

summoning the accused must reflect that he has applied his

mind to the facts of the case and the law applicable thereto.

He has to examine the nature of allegations made in the complaint

and the evidence both oral and documentary in support thereof and

would that be sufficient for the complainant to succeed in bringing

charge home to the accused. It is not that the Magistrate is a silent

spectator at the time of recording of preliminary evidence before

summoning of the accused. The Magistrate has to carefully scrutinise

the evidence brought on record and may even himself put questions

to the complainant and his witnesses to elicit answers to find out the

truthfulness of the allegations or otherwise and then examine if any

offence is prima facie committed by all or any of the accused.”

27. As held by this Court in the case of India Infoline

Limited (supra), in the order issuing summons, the learned

Magistrate has to record his satisfaction about a prima facie case

against the accused who are Managing Director, the Company

Secretary and the Directors of the Company and the role played by

them in their respective capacities which is sine qua non for

initiating criminal proceedings against them. Looking to the averments

and the allegations in the complaint, there are no specific allegations and/or

averments with respect to role played by them in their capacity as Chairman,

Managing Director, Executive Director, Deputy General Manager and Planner

& Executor. Merely because they are Chairman, Managing

Director/Executive Director and/or Deputy General Manager and/or

Planner/Supervisor of A1 & A6, without any specific role attributed

and the role played by them in their capacity, they cannot be

arrayed as an accused, more particularly they cannot be held

vicariously liable for the offences committed by A1 & A6.”

27.In Maksud Saiyed v. State of Gujarat

2

, this Court held:-

“13. Where a jurisdiction is exercised on a complaint petition filed in

terms of Section 156(3) or Section 200 of the Code of Criminal Procedure,

the Magistrate is required to apply his mind. The Penal Code does not

contain any provision for attaching vicarious liability on the part

of the Managing Director or the Directors of the Company when

the accused is the Company. The learned Magistrate failed to pose

unto himself the correct question viz. as to whether the complaint petition,

even if given face value and taken to be correct in its entirety, would lead

to the conclusion that the respondents herein were personally liable for

any offence. The Bank is a body corporate. Vicarious liability of the

Managing Director and Director would arise provided any

provision exists in that behalf in the statute. Statutes indisputably

2 (2008) 5 SCC 668

12

must contain provision fixing such vicarious liabilities. Even for the said

purpose, it is obligatory on the part of the complainant to make requisite

allegations which would attract the provisions constituting vicarious

liability.”

28.In State of Haryana v. Bhajan Lal

3

this Court held:-

“102. In the backdrop of the interpretation of the various relevant

provisions of the Code under Chapter XIV and of the principles of law

enunciated by this Court in a series of decisions relating to the exercise of

the extraordinary power under Article 226 or the inherent powers under

Section 482 of the Code which we have extracted and reproduced above,

we give the following categories of cases by way of illustration wherein

such power could be exercised either to prevent abuse of the process of

any court or otherwise to secure the ends of justice, though it may not be

possible to lay down any precise, clearly defined and sufficiently

channelised and inflexible guidelines or rigid formulae and to give an

exhaustive list of myriad kinds of cases wherein such power should be

exercised.

(1) Where the allegations made in the first information report or the

complaint, even if they are taken at their face value and accepted in

their entirety do not prima facie constitute any offence or make out

a case against the accused.

….

(3) Where the uncontroverted allegations made in the FIR or

complaint and the evidence collected in support of the same do not

disclose the commission of any offence and make out a case against

the accused.

….

(5) Where the allegations made in the FIR or complaint are so

absurd and inherently improbable on the basis of which no prudent

person can ever reach a just conclusion that there is sufficient

ground for proceeding against the accused.

…..

(7) Where a criminal proceeding is manifestly attended with mala

fide and/or where the proceeding is maliciously instituted with an

ulterior motive for wreaking vengeance on the accused and with a

view to spite him due to private and personal grudge.”

29.Short payment of tax per se is not a criminal offence, as held by this Court

in Devendra v. State of U.P.

4

. The High Court ordinarily would exercise its

3 (1992) Supp (1) SCC 335

4 (2009) 7 SCC 495

13

jurisdiction under Section 482 of Cr.P.C., if the allegations made in the FIR taken

to be correct in entirety, do not make out any offence. When the allegations

made in the FIR or evidence collected during investigation do not satisfy the

ingredients of an offence, the superior Courts would not encourage harassment

of a person in a Criminal Court.

30.In G. Sagar Suri & Another v. State of U.P. and Others

5

, this Court

adjudicating the liability of a Director in a proceedings under Section 420 of the

IPC held:-

“8. Jurisdiction under Section 482 of the Code has to be exercised

with great care. In exercise of its jurisdiction the High Court is not

to examine the matter superficially. It is to be seen if a matter,

which is essentially of a civil nature, has been given a cloak of

criminal offence. Criminal proceedings are not a short cut of other

remedies available in law. Before issuing process a criminal court

has to exercise a great deal of caution. For the accused it is a

serious matter. This Court has laid certain principles on the basis

of which the High Court is to exercise its jurisdiction under

Section 482 of the Code. Jurisdiction under this section has to be

exercised to prevent abuse of the process of any court or

otherwise to secure the ends of justice.

…

14. We agree with the submission of the appellants that the whole

attempt of the complainant is evidently to rope in all the

members of the family particularly those who are the parents of

the Managing Director of Ganga Automobiles Ltd. in the instant

criminal case without regard to their role or participation in the

alleged offences with the sole purpose of getting the loan due to

the Finance Company by browbeating and tyrannising the

appellants with criminal prosecution. A criminal complaint under

Section 138 of the Negotiable Instruments Act is already pending against

the appellants and other accused. They would suffer the consequences if

offence under Section 138 is proved against them. In any case there is

no occasion for the complainant to prosecute the appellants

under Sections 406/420 IPC and in his doing so it is clearly an

abuse of the process of law and prosecution against the

appellants for those offences is liable to be quashed, which we

do.”

5 (2000) 2 SCC 636

14

31.In Joseph Salvaraj A. v. State of Gujarat and Others

6

, this Court held

that even if chargesheet had been filed, Magistrate could still examine whether

the offences alleged to have been committed by the accused were prima facie

made out from the complainant’s FIR, chargesheet, documents, etc. or not.

32.In the instant case, the allegations in the FIR read with the chargesheet

filed by the Lokayuktha Police only discloses short payment of road tax. There

is only a vague, bald allegation of collusion and conspiracy to defraud the State

of revenue, which is devoid of any material particulars.

33.The Appellant filed the Criminal Revisional Petition under Section 482 of

the Cr.P.C. praying that the proceedings in Special Case No.4 of 2016 on the file

of the III

rd

Additional District and Sessions Judge, Ballari sitting at Hosapete be

quashed in so far as the Appellant is concerned.

34.In the said petition the Appellant contended:-

(i) The Appellant is not in charge of the day to day affairs of the company,

M/s MSPL limited;

(ii) The Appellant had not signed the application for registration of the

vehicle in question;

(iii) Even though the vehicle is owned and registered in the name of the

Company, no complaint has been filed against the Company but only

against the Appellant;

(iv) No notice was issued to the Appellant during the investigation and no

opportunity was given to the Appellant or to the Company.

(v) The Company M/s MSPL Limited had paid the entire tax amount, as was

6 (2011) 7 SCC 59

15

evident from “no dues certificate” issued by the RTO, Hosapete dated 16

th

August, 2016.

(vi) The Appellant has not gained any pecuniary benefit, nor has the

company gained any pecuniary benefit;

(vii) The Appellant never met any official of the road transport, the question

of conspiracy involving the Appellant did not arise.

35.The Appellant claims that he has never been involved in any criminal

offence in his life time. The false implication of the Appellant would damage the

reputation of the Appellant. There being absolutely no materials against the

Appellant anywhere in the chargesheet, the proceedings as against the

Appellant are liable to be quashed. The filing of the chargesheet against the

Appellant is arbitrary, harassive and unsupported by any materials on record.

36. None of the aforesaid contentions have been considered by the High

Court. The High Court observed:-

“14. On going through the charge sheet filed by the investigation

officer, which is referred to above, discloses that accused Nos.1

and 2 have involved in evasion of the tax and admittedly, the

difference tax of Rs.20,44,468/- was collected from accused No.2

only on 20.03.2013, whereas, the R.C. was issued on 10.01.2011

by collecting nominal tax of Rs.21,98 ,801/- only. The allegation is

of serious nature and these facts are not disputed. Under such

circumstances, it cannot be concluded that the criminal

proceeding was initiated against the accused Nos.1 and 2 without

any basis. The contention of the learned counsel for accused No.1 that he

was not knowing the value of the vehicle and he accepted the value as

declared by accused No.2 and therefore, he demanded lesser amount of

tax, cannot be accepted at this stage. Similarly, the contention of the

learned counsel for accused No.2 that he was not knowing either the value

of the vehicle or the tax and whatever tax demanded by accused No.1 was

paid by him and therefore, he was not committed any offence also cannot

be accepted at this stage. When there is specific allegation made against

various accused including the present petitioners, regarding evasion of tax

systematically showing the value of the imported vehicles at a lesser

value, the same cannot be ignored. Therefore, I am of the opinion that the

petitioners are not entitled for the relief they are claimed in the present

petitions and they are required to answer the charges and face the trial.”

16

37.The Appellant has not questioned initiation of criminal proceedings

against any of the other accused persons. He has no intention of stalling

proceedings against any person involved in smuggling cars or forging or

fabricating documents or committing any other illegal activities. He has

questioned the legality of initiation of proceedings against him for alleged short

payment of road tax in respect of a vehicle owned by the company of which he

is Chairman and Managing Director e ven though, the alleged deficit road tax

had been paid by the company within one month of issuance of demand notice.

38.There is no whisper of how and in what manner the Appellant has abetted

the commission of any offence. It is nobody’s case that any document

submitted in connection with the vehicle in question imported by M/s MSPL

Limited is fake or fabricated. That is not the charge, so far as the Appellant is

concerned. From Paragraph 11 of the order dated 7

th

August 2012, it transpires

that in case of some of the cars, the owners had declared the selling rates at

the factory as the value of the car, and not the on road value which would be

about three times the factory value.

39.Mr. Rohatgi emphatically argued that the company of which the Appellant

is the Chairman and Managing Director, M/s. MSPL Limited, had paid road tax as

charged by the Motor Vehicle Authorities on the basis of the value of the vehicle

as given in the invoice. The Appellant has annexed a copy of the invoice which

shows that the vehicle in question was purchased by the Company from Aston

Martin Brussels by the Manager of M/s MSPL Limited at a total cost of

162,465,00 Euros, the Appellant has also annexed the application form for

registration of the vehicle. It is pointed out that all the required information was

provided in the application for registration.

17

40.Opposing the appeal, Mr. Subhranshu Padhi, learned counsel appearing on

behalf of the State of Karnataka emphasized the gravity of the allegations in the

complaint. Mr. Padhi submitted that there was a racket in operation to defraud

the State of revenue of crores of rupees. Mr. Padhi submitted that this Court

ought not to quash the proceedings.

41.Mr. Padhi tried to distinguish the judgments of the High Court cited by the

Appellant, that is, the judgments/orders in the cases of S.V. Nandaraju

(supra), S. Rajendran (supra) and K.J. Kuruvilla (supra). Mr. Padhi pointed

out that in the cases of S. Rajendran (supra) and K.J. Kuruvilla (supra),

where the High Court had quashed the criminal proceedings, the demand notice

for deficit tax had been issued and the deficit tax had also been realized before

the private complaint filed by the Respondent No.2 was registered.

42.The mere fact that demand notice may have been issued and the

differential tax realized before institution of the private complaint is in our view

inconsequential. Either the charges disclose an offence of defrauding the State

of revenue or the offence of defrauding the State of revenue not made out. The

question is whether the materials on record disclose any criminal act on the part

of these Appellants. The answer cannot but be in the negative.

43.The judgment dated 19

th

December, 2019 in the case of S.V. Nandaraju

and others (supra) is distinguishable and has no application to the facts of this

case. The accused were officers and/or employees of the Motor Vehicles

Department, some of whom had retired long before the complaint was lodged.

In some of the cases, proceedings had been quashed on the ground that

18

sanction under Section 17 of the P.C. Act to prosecute had been declined by the

State Government.

44.Mr. Rohatgi argued with force that the Company had paid full road tax as

charged by the Motor Vehicles Authorities, on the basis of the actual invoice

value of the car in question. No further amount was payable. However, when

the RTO raised a notice of demand for Rs. 21 lakh odd in 2012, the company did

not raise any dispute since the amount claimed was a small amount for the

Company, which had a turnover of crores of rupees.

45.This Court is of the view that the proceedings against the Appellant are

misconceived, harassive, in abuse of process of law and have been initiated

without proper application of mind. This appeal is, therefore, allowed. Further

proceedings against these Appellants in the Court below, shall remain stayed.

…..............................J.

[INDIRA BANERJEE]

................................J.

[J.K. MAHESHWARI ]

NEW DELHI

MARCH 14, 2022

19

ITEM NO.26 Court 8 (Video Conferencing) SECTION II-C

S U P R E M E C O U R T O F I N D I A

RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (Crl.) No(s). 9528/2021

(Arising out of impugned final judgment and order dated 22-10-2021

in CRLP No. 100167/2017 passed by the High Court of Karnataka

Circuit Bench At Dharwad)

SRI NARENDRA KUMAR A. BALDOTA Petitioner(s)

VERSUS

THE STATE OF KARNATAKA Respondent(s)

(IA No. 160552/2021 - EXEMPTION FROM FILING C/C OF THE IMPUGNED

JUDGMENT IA No. 160554/2021 - EXEMPTION FROM FILING O.T.)

Date : 14-03-2022 These matters were called on for hearing today.

CORAM : HON'BLE MS. JUSTICE INDIRA BANERJEE

HON'BLE MR. JUSTICE J.K. MAHESHWARI

For Petitioner(s) Mr. Mukul Rohatgi, Sr. Adv.

Mr. Mahesh Agarwal, Adv.

Mr. M.S. Ananth, Adv.

Mr. Anshuman Srivastava, Adv.

Mr. Rohan Talwar, Adv.

Mr. E. C. Agrawala, AOR

For Respondent(s) Mr. Shubhranshu Padhi, AOR

Mr. Ashish Yadav, Adv.

Mr. Rakshit Jain, Adv.

Mr. Vishal Banshal, Adv.

UPON hearing the counsel the Court made the following

O R D E R

Leave granted.

The appeal is allowed in terms of the signed reportable

judgment. Further proceedings against the appellant in the courts

20

below shall remain stayed.

(GULSHAN KUMAR ARORA) (MATHEW ABRAHAM)

AR-CUM-PS COURT MASTER (NSH)

(Signed reportable judgment is placed on the file)